In Brief: Bad Formula Costs FDIC $7M in Refunds

WASHINGTON - The Federal Deposit Insurance Corp. is paying $7 million in refunds to 38 institutions, including roughly $4 million to Amsouth Bancorp of Birmingham, Ala.

The agency discovered it had used a faulty formula to calculate insurance premiums on certain deposits from 1992 to 1996. During that time 31 institutions underpaid, costing the Bank Insurance Fund and the Savings Association Insurance Fund $49 million. None of these banks will be asked to make up the difference.

The deposits in question are dubbed "Oakar" after the congresswoman who wrote in a provision to the 1989 thrift bailout law that prevented institutions buying banks or thrifts from transferring the acquired deposits out of their insurance fund.

The FDIC has hired the accounting firm PricewaterhouseCoopers to ensure that the problem is fixed and future assessments are accurate.